Redacted_JOTFOC_STRATTON_6K_MTU_MAINT_rev2_for_FBO.pdf

HSCG85-15-R-P45E55

Justification for Other Than Full and Open Competition Under 41 U.S.C. 1901 and 10 U.S.C. 2304(c)(1)

Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

RFP No. HSCG85-15-R-P45E55

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by FAR Part 13.5, Test Program for Certain Commercial Items, this justification for the use of the statutory authority is supported by the following facts and rationale required under FAR 13.501(a)(1)(ii):

1. Agency and Contracting Activity: The Department of Homeland Security, United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Long Range Enforcement Product Line (LRE PL).

2. Nature/Description of the Action: SFLC LRE PL proposes to enter into a contract on the basis of other than full and open competition with MTU America Inc. (MTU), 39525 Mackenzie Drive, Novi MI 48377-1602, for services and materials required to conduct the required 6k hour Main Propulsion Diesel Engine (MPDE) preventative maintenance and Diesel Engine inspection. The maintenance requirements were significantly overhauled during the last Owner’s Group meeting by MTU America Inc. MTU was used as the Main Propulsion Integrator for the National Security Cutters during acquisition. MTU’s experience is critical to the safe and accurate execution of the sensitive work required to repair the MDPE. The total estimated value of this acquisition is $507,000. A firm-fixed price commercial solicitation will be issued using the procedures set forth in FAR Parts 12 – Acquisition of Commercial Items and FAR Part 13 – Simplified Acquisition Procedures, Subpart 13.5 – Test Program for Certain Commercial Items, and elements of FAR Part 15. The period of performance for this contract is 31 Aug thru 30 Sep 2015. NSC OE, fiscal year 2015 funds will be utilized for this requirement.

3. Description of Supplies/Services: This contract will address the critical need onboard the USCGC STRATTON to complete 6k hour Maintenance and Diesel Engine inspection. The MPDE maintenance was significantly overhauled during the last Owner’s Meeting based on engine wear data and current operating conditions. Completing this new maintenance is required to keep the high performance diesel engines installed on STRATTON operating efficiently and reliably. Failing to complete this maintenance will void warranties and place the MPDE’s in significant risk of having a catastrophic casualty. Not completing the maintenance places an unacceptable risk on the MPDE’s. The effects of not completing the maintenance will be felt on STRATTON’s next patrol as the engine operates well beyond 6,000 hours. USCG can expect the following events to unfold: The MPDE’s will begin to operate outside of their designed parameters, which will cause a degradation of performance and will put the MPDE’s at risk of a catastrophic casualty.

A catastrophic casualty while underway will have a crippling impact on STRATTON’s patrol. The USCG and non-OEM (Original Equipment Manufacturer) contractors do not have the technical expertise to correct catastrophic casualties on the MPDE’s, which means the repairs will need to be contracted out to the OEM. The OEM is not always available to complete work on short timelines, which can leave the cutter stranded in a foreign port. Further, correcting catastrophic casualties on a short timeline is exceptionally expensive and makes deferring maintenance a financially imprudent decision; the USCG saves money and maximizes operational time by not deferring maintenance.

MTU was the designer and integrator of the 418’ WMSL Main Propulsion system. They calculated how each engine sub-system would be able to meet the system requirements, and have continued to refine their calculations based on inspections and operations data. The maintenance is a product of their latest guidance

Period of Performance: 31 Aug 2015 thru 30 Sep 2015. A breakdown of the government estimate follows:

CLIN Item Description Total

6k Maintenance: Cylinder heads, Fuel injection Pump and Fuel Injectors $490,000.00

002 Diesel Engine Inspection $17,000.0 0

4. Identification of Statutory Authority Permitting Other Than Full and Open Competition:

The statutory authority permitting other than full and open competition is 10 USC 2304(c)(1) as implemented by FAR Subpart 6.302-1, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Demonstration that the Nature of the Acquisition Requires Use of the Authority Cited:

Because of the complexity and extensive amount of work, MTU America Inc is the only source who can complete all of the required work onboard STRATTON within the designated performance period safely, proficiently, and with an acceptable risk to USCG’s finances and operational readiness. During acquisition of the National Security Cutters, MTU served as the Main Propulsion System Integrator. This role enabled them to establish working relationships with all of the commercial vendors that provided Main Propulsion equipment for the National Security Cutter. These relationships give them the ability to provide a unique service and product not available from other contractors. In order to insure this project is completed correctly and on time, it is vital to utilize these capabilities.

One of the derivatives of this unique relationship is the greater ease in sharing proprietary knowledge and then retaining it. The high-level technical information required for this work is proprietary knowledge that the company guards closely and only discloses to trusted entities. Having this proprietary knowledge readily available to the technicians completing the work is vital to the health of the project. It is unrealistic to assume that a general contractor will be able to provide accurate information to technicians either accurately or in a timely manner.

Attempting to complete this work without OEM proprietary data or using other than OEM parts could cause failure to occur; degradation to the vessel’s primary mission could result in a failure to meet USCG operational commitments. Using inferior quality parts, parts that do not fit or are not fully compatible with the equipment being repaired would not only delay the already expensive repair, but could further degrade the reliability and functionality of the equipment being repaired. Using other than OEM parts could shorten the mean time between failures of this equipment. Any schedule slip in the execution of this maintenance jeopardizes the USCGC STRATTON’s congressionally mandated operational schedule.

Upon return to home port both MPDE’s onboard the USCGC STRATTON will have exceeded 6,000 hours of operation. Following the inport, they will embark on another long patrol. This makes it critical that the scheduled maintenance is completed. Not completing this scheduled maintenance in a timely fashion jeopardizes the reliability and performance of the high performance diesel engines in service on STRATTON.

If some of the components that are affected by the maintenance were to fail, it would cost untold money to repair and would consume an unacceptable number of operational days. From a financial and operational readiness perspective, the USCG cannot afford to defer this maintenance.

Maintaining the MPDEs and ensuring their reliability is necessary to complete critical missions. Congress has mandated that the USCG increase the 418' WMSL Days Away From Home Port (DAHFP) from the current standard of 185 DAFHP to 210 DAFHP. This congressional mandate also requires the USCG to eventually increase this operational tempo to 235 DAFHP. The new maintenance takes the increased operational tempo into account, so as to ensure they meet the high reliability-standard. It also puts STRATTON's congressionally mandated operational schedule at significant risk. The operational impact to primary and secondary missions is described below:

- Search and Rescue: This is the most common and visible mission of the USCG.

Since these missions deal with life and death, the MPDE must meet an exceptionally high standard for reliability and performance. Completing all the planned maintenance is the best way to assure this.

- Counter Narcotics Operations: When intelligence is received or a target is located, the MPDEs will be ramped up, so the cutter can respond as fast as possible. Repairing an MPDE, or limiting its performance due to symptoms (ex:

overheating, unusual noise, high vibration), will significantly degrade the cutter’s ability to respond.

- Fisheries Enforcement: These are endurance operations that require the MPDEs to either be sprinting to the next fishing fleet, or be in standby, while the cutter station-keeps off of a fishing vessel with a boarding team onboard. Fisheries Enforcement patrols will require the MPDEs to be constantly engaged with predictable performance.

- Defense Operations: Defense Operations are extremely high tempo with an exceptionally slim margin for error. While in a precarious situation, halting the MPDEs for even short periods to correct minor casualties is unacceptable. They must be performing at their peak.

- Training: The USCG has not become proficient enough to complete the maintenance with 100% certainty. The USCG plans on having technicians shadow and learn from the OEM. Having the maintenance completed by the OEM will ensure that the USCG learns the correct methods and will be able to complete it in the future.

These combined impacts significantly reduce the ability of STRATTON to support US interests around the globe.

As the experienced propulsion systems integrator, it is in the best interest of the Government to have MTU America be responsible for all aspects of the completion of the 6k, 8k, and 12k hour maintenance.

6. Description of efforts made to ensure that offers are solicited from as many potential sources as is practicable:

An effort to promote full and open competition was accomplished on April 6, 2015 with an email request to MTU for release of any manufacturing drawings, specifications, and other technical data pertaining to this maintenance to the USCG.

MTU responded by email on April 7, 2015, stating that MTU will not release manufacture drawings, specifications or other technical data as it relates to the engine.

In addition to this request, an effort to solicit as many potential sources as practicable was accomplished with a sources sought notice posting on March 24, 2015 on Federal Business Opportunities (FBO) with a closing date of April 7, 2015.

This FBO publication notified industry of the USCG’s intent to acquire services and materials required to conduct the required 6K hour MPDE preventative maintenance and Diesel Inspection. Companies having the expertise and required capabilities to provide this type of maintenance were invited to submit information discussing such capabilities.

Finally, this procurement is posted as DHS-Acquisition Planning Forecast System (APFS) No. F20150226384 at http://apfs.dhs.gov.

7. Description of efforts to ensure that offers are solicited from as many potential sources as is practicable:

The Contracting Officer anticipates the prices will be fair and reasonable based on comparisons with the Independent Government Estimate; extensive acquisition history with MTU; and a recent similar acquisition for the USCGC BERTHOLF (WMSL 750) and the USCGC WAESCHE (WMSL 751). A price analysis will be performed to ensure a fair and reasonable price is negotiated in accordance with FAR 15.404. Additionally, in accordance with the Department of Homeland Security policy, the offeror may be required to submit Data Other than Certified Cost or Pricing Data (FAR 15.403-3) to support price negotiations.

8. Description of Market Research:

Market research was conducted from Jan 2015 through April 2015. Market research included a review of acquisition history, commercial and Government data bases (Fed Log, Inventory Locator Service research tools, internet research and FBO). In addition, distributors were contacted via telephone to search for any authorized distributors/service providers for MTU 20V 1163 TB93 engine systems utilized the USCG NSCs. Market research confirmed that MTU does not have any authorized distributors or certified service centers for this model engine. Other Marine Contractors on the West Coast and throughout the country, such as Bay Ship and Yacht, MSI, and Federal Marine and Defense Services, do not have the technical knowledge to complete the work properly and on time, without the Government assuming significant risk. The USCG has determined that hiring another vendor would result in an unacceptably high level of risk, unless that vendor subcontracted a majority of the work to MTU, and had a senior MTU Technical representative supervising all the work. This would significantly raise the price of the work and make the administrative side of the contract more complicated. Removing MTU from the contract, or giving them merely a supervisory role, would subject the execution of this contract to an unacceptable schedule risk that would jeopardize STRATTON’s congressionally mandated operational schedule and would expose the USCG to unacceptable amounts of technical risk. No other firm, other than the OEM, MTU, was found to be able to provide the required parts and service.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition:

The Government does not possess the technical data and/or drawings pertaining to the manufacturing or the maintenance of these engines, which are proprietary. These engines are designed, engineered and built to close tolerances and have undergone numerous shop tests and rigorous operational testing before being certified and approved by the OEM for use by the end user. MTU is the only known company possessing the original drawings, specifications, engineering control procedures and proprietary methods to ensure the design configuration, manufacturing and quality control required to ensure these engines operate in accordance with engineering specifications and requirements.

Additionally, MTU owns special tooling required to perform this maintenance. Per the OEM, this tooling is proprietary and has not been sold in the marketplace. There are currently no authorized tech reps with ownership of this tooling. The USCG is working toward purchasing this tooling to be able to pursue other competitive routes in the future.

Since the special tooling, drawings, manufacturing processes and other technical data are proprietary to the OEM, it is impossible for the USCG to evaluate aftermarket parts and overhaul processes which could be inferior. After market (non- OEM) vendors do not have access to this proprietary information and therefore could not perform this maintenance as required. Additionally, updates/upgrades are incorporated periodically by the OEM to ensure continued reliable and safe operation.

10. A listing of sources, if any, that expressed, in writing, an interest in the acquisition.

In accordance with FAR Subpart 5.2, in an effort to solicit as many potential sources as practicable, a Sources Sought Notice (HSCG85-15-S-P45E55) was advertised on FBO from March 24, 2015 through April 7, 2015. A response was received from MTU. Also, Drake Engineering, LLC, a small, disadvantaged Veteran-owned small business and Custom Ship Interiors, a small, veteran-owned business, expressed interest claiming expertise and qualifications to perform this requirement outlined by the OEM. However, as stated above, special tooling is required for this maintenance and only the OEM has possession. Therefore, Drake Engineering and Custom Ship Interiors are not considered viable sources for this requirement.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for supplies or services required:

MTU owns the technical data and drawings and it is unlikely they will sell the rights of such data to the USCG. The USCG has made several attempts to acquire the proprietary data with no success, including an attempt for this acquisition. The USCG will continue to engage MTU for release of proprietary data prior to any subsequent acquisition.

All future requirements will be synopsized. Unsuccessful efforts to obtain OEM data make it unlikely that barriers to competition will be overcome. At the present time, no other known vendors have the required knowledge, special tooling, and access to OEM parts to be capable of performing this work.

Currently, the USCG is developing and growing its expertise with the 418’ WMSL.

This planned maintenance still requires OEM Technical Representatives on site to lead the repairs and act as technical experts. We will have senior USCG Technicians on site to observe and learn from the OEM technical experts to enable us to lead repairs of this nature in the future.

12. Technical/Requirements Personnel Certification. I certify this requirement meets the Government’s minimum need and that the supporting data, which forms a basis for this justification, is complete and accurate.

ENG2 Alaun Buckley Date Technical Representative

13. Contracting Officer’s Certification. I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Wilma L. Estrada Date Contracting Officer

APPROVAL:

Jennifer M. Stock Date Section Chief/Contracting Officer

14. Legal Review and Concurrence:

Monica Vigil Date Procurement Law Attorney